i just want to read something from a relatively famous general, dwight eisenhower in his farewell address. he said another factor in balance -- wii u linda and her government must avoid the impulse to live only for today, plundering for our own convenience the precious resources of tomorrow. we cannot mortgage the material assets of our grandchildren without risking the loss of their political and spiritual heritage. we want democracy to survive for all generations to come. not to become the insolvent phantom of tomorrow. that is a wonderful warning to all of us regarding trillions

dollar deficits and you have said in the shares. you know the challenges that we face. back in 1977 you were one of the first people to ever introduce a biannual budget bill. do you support that concept? >> i have always thought that it made sense to try to extend, because we were fighting a budget battle every year and frankly we would have been better off establishing a two-year process in which we would have said you know, it would give us some planning for the future. it would allow us to look not just at the moment but also what we need for the next year and frankly it would have provided a little more stability within the congress of the answer to your question is kent i still supported by annual budget. >> hopefully maybe i can -- when you started several decades ago, how would that affect the military planning in your budget

planning rather than a single year? >> i think it would give us the opportunity to establish a much more stable approach to funding defense if we knew that we didn't have to fight this battle over funding every year but had at least a two-year cycle to be able to look at. >> to to do you feel would enhance oversight? >> i think it would because my view, the point behind the legislation i introduced was to allow one year to go through the budget process, the appropriations process and frankly one year for better oversight. >> thank you. list and i'm very cognizant of the budget restraints we have. we are all wrestling with this, all of us are and i know you are as well. i represent northeast wisconsin where they find shipbuilders are building combat vessels. i'm just wondering, kind of wondering how the decision process was made for reduction in lcs? >> obviously the navy made the recommendations on it because i

think they were trying to emphasize other elements within the fleet that they thought they would need for the kind of flexibility and agility we needed, but specific weight you know i can't give you a specific answer to that. >> general any idea? >> i think it goes back to the chairman's comment about are we giving up on a particular number as we go for the size of the fleet? and i think that with the cno is doing is taking a look at future threats, taking a look at a new fiscal environment which we all acknowledge in determining how best to manage the fleet so it provides as much versatility as possible. anything we do now has to be multi-roll. that is one of the characteristics of the decisions we have made in this budget. you will see the things that had a single role in the past have been, we are letting them go so we can have as much multi-roll capability is as possible.

>> general if i could follow up with one quick question and thank you for the answer by the way. could chew expand on what we might be able to do to encourage nations like germany and france and others in europe to, i think there's a sense that we are pulling more of the weight then they are. maybe if you could address that a little bit. >> i always start an answer to that question by pointing out that you know if we go to war tomorrow folks will asked to go with us are still our traditional partners and so we need to stay committed to them as they do to us. the nato budget in the aggregate is actually quite large. is about $3 billion in the aggregate. your point though is the absolutely correct one which is how can we best harmonize their capabilities with ours. there are some things they need to invest and we have told them. for example isr, things that typically, on which they rely on

us. and they have an initiative the nato called the nato smart defense and we are trying to actually articulate what that means so that it produces the outcome you just described. >> thank you and i yield back. >> if i could say it every fordham biannual budget. it didn't work before because we never got a biannual appropriation so if you are going to push it -- [laughter] >> taken. mr. pascrell. >> thank you mr. chairman. secretary panetta, thank you for your service, and thank you also mr. hale and general dempsey. i am a bit embarrassed. all the way from the academy to the head of the civic army to hear. you have to let me ask the question mr. chairman. knowing your very specifically

as to why are you cutting or recommending that we cut the missile defense money for israel from $120 million to $106 million? that message is there and it's only a small part of the budget. you know, when we in the day of pandering mr. general, on our side of the table here, and then we will really get some action in the middle east. israel is one of our strongest allies. we have committed to that country. we have doubled the money in the last three years as you pointed out. so it is really beyond me. we waste our time as to who is more concerned about israel, uncle louis orr and millie?

we aren't committed to that country, period. it is important that democracy is -- so i apologize for what you are asked in terms of what you have given to this nation. now mr. secretary want to talk on a light subject, procurement. the realities of the situation that we live in where we need to provide the resources for our military at all times. in previous years, changes in your kermit were nefariously tough to make even though the administration would not request an unneeded weapon system like the f-35 alternative engine. members of congress would sneak funding into the bills anyway. this year we actually had an open appropriation process and i have got to salute the other side. i want to give the folks on the other side credit. we were actually out to take a vote individually on some of

these unneeded weapons systems like the f-35. this unnecessary program was kept alive for years. how much money did we waste when we go back to the years when there were attempts to change this? now that it has been eliminated we are going to save $3 billion. mr. secretary can you talk a little bit about the other procurement changes that are included in this budget and how they will save the taxpayers money moving forward? before you answer that question mr. secretary if you would, on the matter of traumatic brain injury we have a long ways to go to live up to what this congress and past congresses have attempted to do for our soldiers who have not been responded to when they come off the signature injury of traumatic brain injury and post-traumatic stress disorder. i would like you to address that today but at least address the

first question. >> let me just briefly, on your last comment on traumatic brain injury, this is an area of tremendous concern, because what we are seeing is that the men and women coming back from the battle area come even, even though they may not display the symptoms of it, when they are back in their communities, it is clear that they have had that kind of injury and also obviously for those that have gone through ieds, traumatic brain injury is something that we see all the time and the ability to work with that and ensure that these kids are able to regain their capabilities. medical science is doing some wonderful things but we need to do much more to ensure that they are protected. with regards to procurement, this is an area in particular where i think we have to do

everything possible to try to achieve savings. you pointed out some of the decisions that we have made with regards to the procurement area in order to ensure that frankly we don't go ahead with the weapon system unless you know we know that it has been tested and it's fully capable of performing the mission. the problem that procurement area is the stuff drags on for too long frankly and the longer it drags on the more changes are made, the more expensive it is him by the time it finally comes out it it is already outdated. we have to stop that process and that means we have to begin by looking at the changes that have to be made up front to make sure we stick to that in and then go into production on that sooner rather than later. also we have got to be more competitive in bidding with regards to the weapon systems. we have got to require industry itself to cut costs where it can instead of sometimes going ahead and doing things on their side they build in additional costs

in the system. there are a series of steps that we are taking that are part of our efficiencies to improve your kermit reform. >> thank you. >> thank you mr. chairman. secretary panetta and general dempsey thank you so much for your services. is one to let you know there are several of us in this congress that have your back when it comes to this question and we have your back when it comes to supporting our men and women. we also have your back when it comes to not balancing the budget on the backs of our uniformed soldiers. what you do is the number one responsibility of the united states government and that said one of the quotes you said mr. secretary was that this budget and the strategy have no margin for error. i would like to ask you this question. what keeps you awake at night with respect to this budget and the strategy given -- let me give you the second from general dempsey. we have an increasingly competitive security environment so in light of those, what keeps

you guys awake at night? >> i worry all the time about the fact that we are going to wake up and we will be subject to a crisis or an attack, a cyberattack for example that we have no idea where it came from and it virtually has crippled our country. taking down our power grid, taking down our financial systems and i worry a great deal about that. there is a hell of a lot to worry about in the world we are in. i worry about you know, what could happen with iran. i worry about north korea. i worry a great deal about what could happen in the middle east as result of the turmoil there. syria, yemen, bahrain, other places, egypt.

those are concerns but first and foremost i guess i worry about the unexpected attack that we are not prepared to deal with. >> general dempsey anything to add to that? ski if you will keep it short. >> that is all i do, i keep it short. >> i like your style. >> i worry about the kids. if we don't ensure that they are the best trained, the best equipped in the best led force on the face of the planet shame on us in the other thing i worry about, the world needs america to be stabilizing global power. the world needs america and if we reduce our defense capabilities to the point, and we maintain our global aspirations, that disconnect will put those kids express. >> i would like to have a chart on defense spending as a -- of totaled gdp. you talk about the security environments we have. you have a "back about no margin

for error and if we could get the chart up we will be able to -- this is this is a percentage of gdp. the long orange line represents where we have been historically. the line align to the right represents different outcomes. the bottom line is that sequester which we are going to fight to keep that from happening but we will have to find alternative areas to cut. the green line is the president's budget which is the second line from the bottom. spending less than 3% of gdp which is the lowest number in recent history, probably ever in the history of the country, bothers me. i would ask you this and i'm not trying to get you crosswise with the president's policy but in light of your earlier security engagement, what should it be as a percentage of gdp long-term,

assuming we are not trying to recapitalize the forces that have been hollowed out, that we have long-run, long-running planning cycle where we can plan this over the long-term? >> you know, the answer is not a number. the answer is really what is our capability? do we have a strong capability to be able to respond to any adversary, more than one adversary at a time and not only confront them but defeat them. that is a challenge. the budget we presented we so confident we can take on any adversary and be able to not only confront them but to defeat them. i think that has to be the fundamental question and i think we are comfortable even though this has been a difficult process. we are comfortable that with this budget strategy that we presented here, that we can project a merit -- tech america. >> let's get in the weeds for just a minute and talk about about the joint strike fighter for instance.

we will get into brac if i have time. i have said it and you are right it does have amazing capabilities but i'm worried about reprogramming. purchases out five years, i mean when you do that the cost goes up. what is going to happen to the foreign buyers that want to buy this? if we slow down they are going to slow down. what happens -- >> can i give a quick answer? >> we have got three very ants on the jsf fighter and just by virtue of having three variants we have to make sure that everyone of them works. we have been testing a chief one of them. i just took them rained version off of delay of probation and ordered to, because it had met the test. we want to do this right. it is a complicated effort, but

the time we have to test it will guarantee it ultimately and to me go to production we will have a better plan. >> ms. bonhomie chi. >> mr. chairman, as mr. secretary and general dempsey thank you so much very testimony and thank you for your service. i join many others i am sure and appreciating your recognition that the unacceptable level of debt is a threat to our national security, and i hear that back at home as well. thank you for making proposals that will implement efficiencies while keeping our military strong and our nation safe. i wanted to ask you about overseas contingency operations. the budget includes $44.2 billion per year from 2014 through 2022 for future war

costs. mr. secretary and general dempsey, you stated that the courses are on track to take the lead responsibility for afghanistan security and he talked about that today. by the end of 2014, so assuming that timeline holds, is it possible that we could have significant fewer deployed troops in 2015 and beyond and could our cost be dramatically less than the $44.2 billion in those upcoming years? >> well there's no question. i mean we are running almost how much a year now? it's about $88 billion that we are confronting in the war as we transition down. there is no question we are going to achieve additional savings as we transition to the afghan force. as the president has made clear we have been enduring presence and we will have in and during presence in afghanistan but it

will be at a level that i think will help support them. it will be far less than what we are we are doing at the present time. >> if i could at congresswoman that the cost of this conflict, and what i mean by that is some of the oh costs are training to deploy and some of it is executing but we also have this huge bubble of recapitalization and reconstitution coming our way. we have said for sometime even if the war ended today the next two years will be resetting the force so i can predict exactly what those costs will be out that far and they think -- does the thank you and i want to take this opportunity to make a suggestion for some of those cost savings and reiterate the importance that mr. blumenauer raised about cleaning up some of the sites. also i wanted to talk about health care costs, and the affordable care act adopted a

number of measures to begin reducing the escalation of health care costs across the board and impact the cost containment measures to tricare for life costs by $4.4 billion over 10 years thereby reducing military personnel accrual costs in the dod military personnel accounts so as some advocate for the cost savings of the affordable care act be eliminated, how would that impact the military personnel budget without the cost savings from the affordable care act? >> we are looking at that all the time it's a complicated question. i would like to take that for the record and let our experts comment. it's not a real simple answer. >> thank you and i will yield that. >> thank you. mr. mulvaney. >> thank you for being here today, all of you gentlemen thank you for being here today. i recognize we are in a difficult position and trying to

perform a balancing act just like you are. we are trying to figure out how to pay for what it is we are trying to accomplish in the nation i will need your help please do help me understand, i need slide number 12 please. help you understand why we are where we are or why it's difficult and if we don't have slide number 12 it's going to be difficult to do that. >> we are looking at, terms of -- we are looking at a national defense outlay roughly 25% above where they were in the 80's when the soviet union was still around. 70% above where they were as recently as the late 1990s. i hear what you are saying about this first $487 billion worth of cuts. there is no room for air. >> this is 12.

>> i'm looking for the constant dollars in 2000. >> what we are looking at now is even with the 47 that you are looking at which is the green line, you are looking at essentially flat spending and again flat spending off of numbers that are dramatically increased over what they were a decade ago. to sequester which mr. secretary you described as a disaster and it crazy doomsday mechanism takes us out of the 2007 level. than i% cut off of a number that has increased 70% since the year 2000. why is that so hard? i want to agree with you. i want to accomplish the savings you want to accomplish that weiss is so hard to cut 9% from it budget that was 75% a decade ago? >> well i mean i have to tell you every budget agreement i have been a part of, we have never cut the defense budget by half a trillion dollars.

never. this is a very significant cut that the congress gave us to reduce the defense budget by. and to do it at a time when we are facing the threats we are facing in the world. i think that has to be taken into consideration. if you continue to come back at defense and continued to cut it, the margin of air that i talked about is there as it will weaken us and our ability to address the number of threats that are out there. if we were coming out of world war ii, if we were coming out of the war with the threat we are confronting totally receded that would be one thing. that is not the case. you are asking us to do a half a trillion dollars in defense cuts at the same time we are facing a huge amount of threats out there. that is the problem. >> by the way i think if i understand your testimony from earlier if you're planning on the first 487 and am i understanding correctly that you have not made plans for the

sequestration? >> that is correct. >> in all fairness mr. secretary that is just as much of a lot right now as the first $487 billion into the? >> does allow that doesn't take effect until january 2013. >> which is nine months from now? january 2013? see what i tell my folks back home that the secretary of defense is making plans for half a billion dollars in cuts in nine months? >> i think it's totally responsible for congress to allow sequestering to take place that will weaken our defense system and devastated with these across-the-board cuts. >> you are preaching to the choir. i voted against it for that same reason. is just as much of the law what you gentlemen are planning for. >> you but it's a law that frankly doesn't require a hell of a lot of planning because it's so blind find it in the way it approaches it and it basically makes, provides us formula that cuts cuts defense

across-the-board. there is no hell of a lot of planning i can do to deal with that approach to cutting the budget. >> mr. secretary i don't want you to get the impression -- i believe in this circumstance we are across those sides of the aisle between us and i share the same worries you mentioned before. i share the worries about the middle east and assure the worry about cyberattacks and i share the worry about domestic defense. i don't question what you are saying in terms of the roles the country that to perform. my problem is how the hell are we going to pay for it? i just want to let you know that we are just trying to do the same thing you try to accomplish in 1992. >> has a lien i'm with you on that. >> thank you sir. >> mr. honda. >> thank you mr. chairman and welcome. mr. secretary and general dempsey, just want to thank you for appearing before us today

and for your chairman disservice. in recent history, the end of our presence in iraq and the expedited sped -- schedule for a drawdown will go down in history as much as the celebrated offense for growth for some of this these milestones did not come soon enough. with this find is we have to take a hard look at the budget we have been spending and and you mentioned we are coming up to the challenge of approximately $480 billion in savings and there are smart and sophisticated ways that does not endanger our country or citizens. with this recent discussion i understand, i know that cuts up to now, and i guess the question what would would be is a good enough and it sounds like, answering my own question, up to now he yeah.

complicated defense situation we face is in terms of cybersystems and everything else, but given that, the spending, defense spending we have passed that is calibrated by international standards, understand the international research is bigger than the next 17 countries and given these cuts, that we just put in or that you are recommending, what will be our standing? will we still be greater than the other countries? thank you and then i guess the issue about health care has been addressed for our veterans but the 4.4% reduction was a surprise to me because i was asked added meeting whether

tricare would be sustained or not and i said to my knowledge, yes. how will we supplant and how will we augment the kinds of services that tricare is going to be with future funding now? >> well, i will yield to bob but what we have done in tricare is basically provided fee increases for those that are governed by tricare. we don't impact the quality of care they received are the kind of care we are seeing but we do require that they will pay additional fees for those services. that is the proposal that we presented. 's been no change in benefits? >> no change in benefits. >> the fee increase, will that be doable for our veterans? >> we try to design it in a way that would have would have minimum impact on those least able to do it so we are talking about people who retire at

higher levels number one. number two, this is still the best health deal in town in terms of kind of coverage we provide for tricare. it's not bad and what we felt was we have to -- right now health health care coe defense department $50 billion. i have to do something to control those costs and this is the one-week way we thought made sense. >> if i could switch fields now. we have had the issue of okinawa and redeployment of our marines and our fixed-wing and helicopters. i would lead to sit down with someone and get a full detail of that but on the senate side i understand webb levin and mccain, as for a study of the security system or what is the current security system?

they wanted a study of the area before they would move forward on the budget. is that still in play and where are we with that study? >> i think they boyes expressed concerns about some of the approaches that have been agreed to with regards to how we would relocate to guam and the amount of money that would be extended in that move. but we are in the process of working with japan to try to negotiate an approach that we think will make better sense. this has been something that has been bouncing around for 15 years and we think it's time we try to resolve it. the japanese have been cooperative in working with us on this effort. >> i appreciate that and are the two landing strips they are looking at one of the airbases airbases -- thus be i think that is the one of the things we are discussing. >> thank you very much.

>> thank you mr. chairman. good afternoon gentlemen. mr. secretary i do to get a ratio from you. we think of the term were fighter for combat troop, troops. for every one of those brave men and women how many others are behind them, whether they are contractors or civilian employees, uniformed, noncombat, what is the ratio? >> currently we have 1.4 million people in uniform and we have about 750,000 civilians and although it's hard to measure the number something on the order of 300,000 contractors. >> who is supporting who at what time is hard to say but if you want to count the civilians in the contractors, 1.421? >> what is it? if you count the contractors and civilians it would be about 1 million roughly and you have about 1.4 million in uniform.

>> so it is 1.4:1. not one combat fighter 28 or one or something like that? >> depends on how you clarify support. >> personnel are providing support. >> all the support that would come out of this budget. this is the budget committee, so what would that ratio be? >> i think the ratio that you provided is probably pretty close. >> okay. how long will it be before the defense department is audit ready? >> eyes directed that we try to develop our capability on a faster track. i think right now the target was to hit 2017. what i'm trying to do is to at least begin to develop an odd capability by 2014. trying to make with the final

product coming out in 2017. >> just so we are clear this is not -- matches getting the defense department in a position word arctic and be conducted to see how the money is being spent? >> you're absolutely right. look, there is no way i can justify the american taxpayer spending the kind of money we spend in defense of not having the ability to audit where those funds are going. there are individual audits. it's not like we don't know where all of these funds are going but frankly we as a department need to have auditability as a department with the entire budget. >> you understand the concern for members like friend mr. mulvaney when we are all in the on the same team here. but we also have a duty to make sure we are spending this money as wisely as possible. let me finish up a reading a letter from commander of the

u.s. navy reserves 21 years in the military tom pick grow from crawfordsville indiana. i met him for the first time just a few weeks ago. this is not a gotcha kind of letter but i want you to respond to it. appreciate if mike democrat as well as republican colleagues would appreciate what it's saying. this is after he talked about the 12 servicemembers who work natively electrocuted because of faulty wiring and battle attrition by defense contractors. station in the green zone i was assigned a living trailer that is joined a trailer too young contractors and it points. chipping there for while i struck up a conversation and found out they had a job running a network cable. when asked how they'd like to face it was so great to be working there and he was making over $3000 per year plus all expenses and he bragged if he could stay there for three years he would able to put $1 million in the bank and retire before he turned 30. another example, one of the officers befriended a contractor in one day she came to him in tears. he was an honest girl and

couldn't understand why her boss was telling her to mark down eight hours on a time she winch only work two hours per day. these are merely a few accounts. wants a return to my hard time putting the thought out of my mind. how much the spending was necessary for national defense and was taxpayer monies that not on national defense but i'm increasing the profit of defense contractors? i offer this for the record mr. chairman. >> listen, i think the observation that individual is of concern to all of us. i think when taxpayers give us the money to spend on defense, we owe them the responsibility to make sure that every dollar is being spent in order to protect this country and to be able to justify it. and i'm not saying there aren't occasions like pointed out that letter where those are examples of people who abuse the system

and what we have a responsibility to do is to make sure the system is not abused. that is something i am intent on doing. >> thank you. ms. wasserman schultz. >> thank you mr. chairman and secretary. it is great to have you here. mr. secretary i know my colleague asked you earlier about funding levels for israeli missile defense. i apologize, wasn't here when he asked the question. would you mind repeating and explaining what those numbers mean in terms of our overall security cooperation with israel and also explain those numbers as it relates to the numbers from the previous administration and? >> what i said was first of all obviously our support to israel is unshakable and we have reflected that frankly in and our budget requests. the budget request by the way is done in collaboration with very closely with the israeli

government. since taking office, we have, the administration has requested money for a number of missile systems that they have. good ballistic missile defense programs as well as the iron dome system which is a very effective system for defense against short-range rocket attacks. the total amount of assistance we provide israel is $650 million which is more than double those provided in the last administration which was added level of i think about $320 million so we are making a significant contribution to israeli defense. >> thank you and those actions speak louder than words which i think is a universal truth and i know he raised the issue of public -- could you describe the administration's actions to date to differ nuclear is -- iran's

nuclear ambition and their progress for developing and deploying a nuclear weapon? >> the administration, the president has made clear that we will prevent iran from getting a nuclear weapon, period. this is not about to tame it. this is about preventing them from gaining a nuclear weapon and nobody should make a mistake about our intent here. but we have done is to work with the international community to make clear to iran that they have to, they have to deter from the effort that they are making to develop their nuclear capability. they have to stop what they are doing in terms of promoting violence, providing assistance to terrorists abroad. they have to stop any kind of effort that would close the straits of hormuz. we have made very clear what

those red lines are. the international community has joined together to implement a series of very tough sanctions, diplomatic sanctions and economic sanctions and i can tell you those sanctions are isolating iran and impacting their economy. they are impacting on their ability to govern their own country. the whole point of those sanctions is to put drescher on them to make clear that they have to join the international community, live up to their international responsibilities but if they don't, we have put every option on the table to make clear to them that there is nothing that we will hesitate to do to stop them from developing those kinds of weapons. >> thank you and would you say that we have applied the toughest sanctions iran has felt to date with the most

international -- >> these are the most sanctions we have ever applied against one country and the sanctions still, the sanctions we just applied impact on their energy, impact on their banking system and those will continue to take effect. the combination of what we have done i think i sent a very clear signal that the behavior that they are engaged in is not to be tolerated. >> thank you mr. secretary and also thank you for your longtime service to our country. >> mr. huelskamp. >> thank you mr. chairman. a couple of questions first secretary panetta. we talked earlier about the sequester and of course the president did sign the deal that included that and yet there are no provisions in your budget to implement a sequester. did the president direct to to ignore that particular law? >> the position of omb was that

we are not to plan for sequester at this time and that is the direction we have been given and that is what we are doing. >> is that normal to simply ignore a law that could have drastic consequences by refusing to plan for that for that long? >> well, i mean as he pointed we pointed out this is pretty unusual to have a sequester mechanism. i mean the point of it, from the very beginning, was to be so drastic and so insane that would force the congress to do what's right and come up with a deficit reduction package. that's the whole purpose of the sequester. i don't think the congress intended the sequester to actually happen to be truthful. >> i asked the question, did the president direct you to take the sequester? >> the president did not direct me. we basically got directions from omb to basically not planned for

sequester particularly after coming up with $500 billion in deficit reduction? >> you the plan for the sequester indeed and that president is involved, not just congress. are you just hoping that will never happen? is that what we are doing here? >> well, i would hope that you would hope that would never happen. >> there is no answer and apparently there is no -- the same question i want to ask is the issue of readiness and my colleague had mentioned that and i hope by 2014, maybe by 2017. what exactly does that mean if you are not audit ready? >> it means that the defense budget is not auditable and we are the only agency that is not auditable and that is a shame.

so when i became secretary, one of the first things i did was to direct the comptroller that we have to move on a faster track to develop auditable books. >> so does that mean, i mean what insurance do we have that we are spending hundreds of billions of dollars were you are telling us you are going to spend it today? how do we know that? you are simply saying we do not know that? >> well i'm saying obviously auditing is ensuring that what we, how we say we are spending dollars is in fact audited to confirm that is the case. we do have audits in the different agencies. it's not like we don't. generally it's auditing within the different services but overall for the department as a whole, we did not have auditability and that is what needs to be corrected. >> and my constituent contacted me about a news item.

it as you know apparently federal taxpayers are paying for a 750,000-dollar soccer bell at gitmo? is that something the budget -- $750,000 soccer field at gitmo that was announced by the department of defense. is that something you are aware of? >> no i wasn't. >> are you also where the armed forces also owned five separate luxuries resorts around the world that servicemembers can attend as well as perhaps a million civilians can attend as well. is that something you are a whereof at the department of defense as well? >> no. >> a resort that allows you to go barefoot on the waikiki beach, shop and exciting shopping districts are the best one go to walt disney resort.

>> that is not appropriated funds first of all which means that is not part of the defense budget but more importantly, look a lot of the facilities are provided for men and women who go into battle and would have been deployed overseas and do you know what? i think the very least we owe them is the ability to be able to enjoy whatever time they take off from going to war. >> this applies to over 1 million civilians that have never seen war and it also for folks that do not live in these particular areas they cannot jump on a plane mr. secretary. i want to raise the point that if you are not on a capable and you are here asking from more money and not ready for sequester my decisions are very concerned with the proper use of taxpayer funds so i appreciate the answers to the questions and appreciated and an idea but my time. >> mr. chairman i would like to that briefly, the fact that we

are not audit ready we can go through a series of requirements imposed by auditors. we need to do that and i've made it a major area of emphasis. but our systems are designed to know where we spend that money and we have caps on it that indicate we are taking the direction the congress gets us and appropriately to our command so i can tell you where we are spending the money. i can go through all the details and things required by an audit. we need to do it but i don't want to leave you with the impression that we are sitting over there spending this money wherever you want. we do 250 million conning tract infections a year and we have 3000 archers watching us. we do know where we are spending the money. >> if i might -- >> he was able to answer and afterwards -- see her time has expired and we have a vote of 5:00 with five other members. >> gentleman, thank you. general dempsey thanks brought

you years of service and for being here. 11 and front of quite a few committees and i'm sure it is your favorite part. >> it is a. >> secretary panetta you have been on both sides of this and it must be interesting for you to sit in her room and give testimony looking at yourself looking back at your painting on the wall. knowing you have been on both sides of the wall and i appreciate your many decades of service and what you have done. he stated the fact that many of us have stated in other areas as well. education for instance. there've been years and years where if you throw money at it that will fix the problem. there are issues and continuing to throw money at it does not necessarily give you better outcomes. what i hear from you is you are both saying the same thing with defense. the needs to be things that occur and that may not necessarily mean throwing more money at it. it may mean reforming structure so i want to ask you a couple of things. where are we as far as the total

number? you mentioned force reduction. what are we talking about in all branches and force reduction? beware talking about 120,000 that will be reduced over the next five years between now and 2017. >> is this all the uniform or as a civilian as? >> that is what i gave you is all uniform. >> where are we have civilian reductions? we have 700,000 civilians there. >> we have had pursued -- reductions in the civilians. [inaudible] that is something we do need to look at again and. >> that is the question obviously and you are dealing with a significant wide when you have 120,000 uniformed reductions and 15,000 civilian reductions. can i ask what you're thinking the type offered actions? >> our hope is on civilian reductions that we tie that to efficiencies, getting rid of overhead, getting rid of duplication, getting rid of the

contract operations that we don't need so the reductions on the civilian side are pursuant to a list of efficiencies we have to put in place that hopefully will produce more with regard to reductions in that area. >> the 15,000 is -- are there key areas you are looking at to say you mentioned a couple more specifically whether we are dealing with for instance if we close down the line of aircraft obviously there is a billion. is that the kind of thing you're talking about or are you talking about more service? >> i was talking more internal in terms of the operations within the defense department because where there is duplicative operations and where there are operations or areas that are performing roles that frankly we can reduce the number of people, that is the kind of thing i'm talking about but in addition to that, as pointed out

by the comptroller, we have god a large number of contract employees and those contracts that we can reduce will reduce the contract employees. >> how do you not just reduce civilian employees but reduce contractors compensate for that? >> that is what we have to make sure, that does not happen. >> from 12 to 13 the reduction and civilians is roughly proportional to the military. there is only so much you can do. >> i know that feeling extremely well. >> bear with us. pending another proposal on that. spin on this budget but i think the 13 numbers pretty reasonable. be on 13 i think we could go through a five-year planning process each year and and we need to look again. it may be the right number and i'm not so sure. >> the second part of the question as well. we have covered a lot in the

time period. you talk about reform, some going away but also about the heavy technology. i get a feeling there is this push and pull between pure kermit. we have to be lighter, more agile, more technologically savvy and that's more r&d more procurement but we have to come down and procurement as well. we have aircraft at the airport that are 44 years old and much older than i am but we are still using so how do you balance that out? >> i mentioned one thing we are looking at, the multirole, shorter timelines. when i was in the army we had, i got reefed on programs where the requirements were established in 2003. we are not going to deliver until 2014. taking it a certainty that we are going to deliver something that is either late or doesn't spiral in the technology and as

you spiral in in the technology the requirement goes up in the next thing you know you are off to the races on cost. so acquisition reform has to include a much closer merger of requirements and bacterial solutions with senior leader involvement in shorter horizons but i tell you we have not gotten the industry and we haven't gotten the congress of the united states with us but that is the answer. >> mr. young. >> thank you gentlemen for being here today and thank you for your service to our country. first i want to commend the secretary and the undersecretary for your ambitious efforts on the auditor readiness initiative and i'm happy to serve on the audit readiness panel here with an congress and to the extent we can assist you in your efforts, we will continue to lend a critical eye as your efforts play out but we want to help wherever we can. very important. i am concerned that some of these proposed cuts to our

defense budget may not be strategy based and i am open. i'm open to all manner of cuts identifying efficiencies and changing how we do business with respect to health care or servicemembers and veterans, looking into retirement, a whole manner of different things but it has to be strategy based. i know you would agree with that. seems to me there are essentially two different processes that we have to go through here. first to have to clarify the strategy based on current threats and you have indicated i think you characterize the processes, adapting the existing qdr to current circumstances so you are looking for cost efficiencies within the dod budget and shifting our posture to the asia-pacific region. is that a fair care of your station? the second process as i see this translating that strategy into specific spending request,

requesting appropriations based on that redefined, re-clarified strategy. now i think more work could be done in communicating part one, which is why we are pivoting to the asia-pacific region, why we intend to fed more resources into the middle east but i don't want to be too critical of the administration in part one of the two-part process but is the second part, translating strategies or requested appropriations rye have very little idea how the department of defense and the administration more generally came up with each of the spending request. in the absence of that sort of clarity, i think many of us are inclined to fall back on back of the envelope sort of shorthand things like what percentage of gdp are we spending on the military? when we think about it that strikes me as a superficial way

to determine how much we have to be spending on our military. would you agree with that statement, but that is not a strategy based assessment, a percentage of gdp? >> no. >> okay, what about the military spending in other countries? is that all so superficial? it is. >> okay, so when following our oversight role here i also sit on the armed services committee but i think all members of congress we would benefit from a window into your analysis. how you translate your strategy into spending requests. i suspect this is a sensitive methodology, one that you don't want to maybe articulate in an open hearing. is that correct? >> well, no not necessarily. frankly we went through that process with each of the service chiefs and frankly we can sit down with you. we have actually a report that

lists, based on each of the strategies, what decisions in the budget were made for surrender to the strategies and we can walk through that with you. we are happy to do that. >> i think i would benefit measurably in performing my oversight role of should we hold those meetings? could be opened it up to my colleagues as well and do you believe that some of these meetings would be better done in a secure setting as opposed to out in the open? >> there will be some things in particular, certain technologies to overcome anti-access that we have to do close but most of what the secretary said would be available in an open setting. >> i appreciate your commitment to holding each of these meetings for you each of the respective services and i will play a role in helping to assemble my colleagues that thank you very much. i yield back. >> thank you mr. chairman and thank you stir panetta.

general dempsey and secretary panetta i really respect you and i think you're the right person for the job at the right time. i want to talk to you a little bit about the role of the national guard and some of the decisions you have made. you said in your opening statement that we will rely on the stronger start of the national guard and i agree with you completely. as we drive down potentially in the middle east, we are going to rely a little bit more on the guard and reserve units. that will increase and they think that, i was made aware of a letter that the national governors association sent to you about 49 different governors. they definitely are concerned about this same approach with the cuts to the guard. could you talk a little bit about that because in their letter they mentioned that the

air guard provides 35% of the u.s. air force capability or 6% of the budget. they also mentioned in in the letter that we must get impose a proposal that 59% of the aircraft budget reduction and approximately six times the per capita personnel reduction. could you talk a little bit about that approach? beasher. the main thing we did want to maintain a strong guard and a strong reserve and the fact is that we are going to be maintaining the guard at basically the same current levels and we will maintain a reserve at the same levels. with regards to the aircard, which is an area that the air force focused on, in the past they have made cuts with regards to the active duty force in terms of planes. they did not focus on the

reserves and the guard operations. they decided to look at those particularly with regards to planes like the a-10. are these planes multimission? can they performed a kind of role that we need with the new agility that we have is part of our strategy? their determination was that these are basically single mission aircraft and that those are the ones that we need to gradually reduce. we will still retain a large number of them but they wanted to redo some of those. that is what is impacting right now with regards to the concerns i think that were in the governor's letter. having said that what i've asked the secretary of the air force to do as well as well as air force chief was to do everything possible to try to mitigate the impact of those reductions with regards to some of those planes to see what we can do. there are areas where we are going to do more. we are going to do more isr.

are there ways to mitigate some of this by virtue of some of the things we are going to need under the new strategy? pie represent the air guard base in ft. wayne and we have the a-10's there. i think what i have seen in numbers proposes that the aircard can restore and maintain these particular aircraft for 28 cents on the dollar. ..

and that cutting back on her care to nurse because it's a force projection. maintaining the bomber fleet were going to be investing in the new bomber for the future. we are invested in not receive the joint strike fighter to try to develop that kind of fifth-generation capability. with regards to the navy itself, we are going to be continuing investments in the ships that will provide the kind of agility doublets of us the capability quickly the flat tax ships that we have. we are going to be maintained in the navy at 285 ships.

that is what will have been 27 team. our goal in the next five years is to continue to develop the navy to 300 ship navy. so everything about our strategy, where stresses both are naval and air force elements in order to project force, both in the middle east as well as in the pacific. >> thank you. mr. garrett. and secretary on the panel appreciate you being here. i think i may be winding things up for you. for several hours ago i think that mr. doggett raised the issue with respect to what's going was respect to afghanistan on the traffic situation of the loss of a couple of our soldiers over there. and obviously the issue -- there's multiple issues out of there, but the tragedy that was as are soldiers over there, i'm curious from the media accounts, i know this country has apologized to that country for what has occurred, but have you personally or the administration

heard from the afghan government to apologize to us on the family of the soldiers who have lost their life? from afghanistan? beatnik jazz. the defense minister called me over the weekend and apologized for what happened. >> i appreciate that. secondly, to a point that mr. ricci to raised with his regard to the audit, as been on this committee for nine years. longer here than ever and except for chairman brian. regardless is sitting there, democrat or republican, we have heard the same thing, that we are going to get today's. it's important and couldn't going to happen sooner later. the beginning of the testimony of that acreage he said he hoped to have been stunned by 2014 but then following the questioning that sounded like aba her 2017

for this. which is the year you are anticipating that it's up and running? is a complicated process, but in order -- what we need to do -- let me ask hail to talk about this. >> the key statement of the budget statement is concerned to me it should be because it saw the budget data used by 2014. it was all just a provision in the law. i'd have to agree with you. we've over promised and under delivered. >> what is the heart and promise quakes that the ceo was sitting there and says we just don't allow the money's been going to esparza certified audit. that ceo would be out. i'm not saying that here. what is the hardest point? i've heard over the years it has to do with identifying which are assets really are around the country.

>> the hardest finest existing management. we've never had a ceo that actually paid attention in the same way secretary panetta has helped a lot. there hasn't been sustained management attention. this technical factors as well, but it was buried them in the senate hear them. >> maybe they could send them to us in a short paper on it, that would be appreciative because we've never gotten not in the past. >> congressman, i share your concern as a former member of this committee and a former budget sharon owen beat her. when i found out this was the case i said it's unacceptable. one of the very first things hours ago were we have efficiencies of about $150 billion to the ship added onto that 60 billion, that all sounds great. what i'm wondering if can you articulate and document.? >> i've asked this same question. >> from a departmentwide if you

say in this area over here we cut it. >> we can. yes we can. >> my question was who were supposed to 150 billion in efficiency saving and i asked this guy next to me, what are we doing to achieve the savings? and they've laid out each of the areas where we make progress in achieving the savings that we can share those with you. >> our systems are designed. where we spend the money based on what you appropriate. they did that pretty well. they are not designed to provide the information the auditor wants to pass on it. they need to be, but they're not. so that's what we can't do. we know where they're spending the money. when you appropriate funds, we can track it. >> you also said the example he raced here the sounds like an ease of the system, raising about people making too much

money what have you under these cases might take away from that and not about the underlying facts are. that doesn't sound like a confused by the contract are. maybe it sounds more like an abused by someone from the dod, from the procurement side of the equation that would even occur. last question and 50 seconds at the chairman would allow. the department has produced thereunder transport produce several proposals this summer. question on this i guess that's a redundancy is by looking at another reform commission when you already have a proposal out there? now close at that. >> you may not retirement? >> i for one suggested the which is entirely civilian businessman should be reopened and include the participation of uniformed military and noncommissioned officers that they would have -- look, i'm not getting ready to sign up for a retirement plan

that treats uniformed military who moved 21 times in 20 years and who put their lives at risk. i'm not going to equate a retirement plan to the civilian sector. but we got was a civilian site your proposal. >> point taken. just a couple points and closing. i like to re-emphasize that it is trying to make in the beginning, which was put all this in perspective. i've heard you mention the number given to you is because the law of congress passed. i would point out the firewall and the pcs there for 2012 and a number you were given by alan b., not by congress. to put them in days, the savings from the bca spending this $917 billion. the budget we passed out of this committee off the florida house last year saved $1.6 trillion out of discretionary spending. we took last year's obama line

senator gaetz minus $78 billion off the tee at flight 11 had up in the greater the number and still save $1.6 trillion. i clearly understand; extolled like what we did. we also saved far more in mandatory spending because as you mention that's two thirds of the budget. the point there is simply say if i heard you mention you were given mr. of coming up at $500 billion in deficit reduction. you've done that. you've done a wonderful job. what you are given as a job to do you have done your job exceptionally well. i really mean that. i just think you were given a job to do heavy lifting in further parts of the budget that did not have this kind of responsibility placed upon them. you're their cabinet secretaries, other parts of the government. the budget the president sent us has a net deficit reduction of $400 billion. if you're carrying the weight of

a $500 billion deficit reduction out of your department and all of the rest of the government for the next 10 years, and that the deficit reduction of $400 billion. it's a budget that has a net spending increase of $1.5 trillion in new movie features a $400 billion deficit reduction numbers 1.9 train dollars. so it's about priorities. it's about what is the priority the federal government or the responsibility of the federal government and are we applying to kind of disappointed you clearly if exercised in the rest of government to move it simply argues that is not. you are, but the administration is not. as a result, this is why we still make the case, that this is not a strategy driven project, but a budget driven strategy. i do want to always have the last word. >> thank you, mr. chairman. i appreciate that.

thank you, mr. secretary, general dempsey, comptroller, undersecretary. i thank you offer your testimony. a few words in response to the chairman. i think as a secretaries indicated, we all hope we can find a bipartisan way. we must find a bipartisan way to undo the sequestered, but replace it with what i hope will be a balanced approach to deficit reduction. i think the secretary was loud and clear on that. with respect to the president's budget, what the president did was to take the tca budget control act, discretionary levels that were enacted on a bipartisan basis by this congress and he extended essentially the firewall levels moving forward. the chairman is right. workplace for two years, but if you extend the project goes

forward, you stay within the defense budget he had not essentially been proposed in this budget. i want to reiterate the fact that when it came to the sequestered and how it was designed, there was a discussion about whether or not we would reach that deficit target in part by closing a lot of tax loopholes come a getting rid of tax subsidies and asking folks at the high end of the income scale to pay and help reduce our deficit and a balanced way. and the response was no. we prefer to put these defense spending as part of the sequestered by the mechanism. to his credit, the chairman of term services committee said at one point that you're forced to choose between those two, you would close the tax loopholes. i don't know if he still maintains that position. as we go forward leadfoot is a bipartisan balanced framework that other bipartisan missions

have taken to this task. >> i will close at that, which we should just do our jobs. we know cvs should be taken from this budget. there's clearly room for savings. the question did into the depths. we just want to do our jobs. we just want to do her job's not that it went to tina mack for indulging us for all this time. this hearing is adjourned. [inaudible conversations] [inaudible conversations]

>> appealing to the social conservatives bury back his presidential campaign. and talk show this week in and of speeches mr. santorum responded to comments made by president john f. kennedy. >> i believe in america for the separation of church and state is absolute. where no catholic would tell the president gets out of whack and no protestant battalions parishioners for whom to vote. where no church or church school is granted any public funds or political preference. and where no man is denied public office merely because his religion differs from the president who might appoint him or the people who might elect

him. >> watch more president kennedy's speech on their website on their video library. go to c-span.org and find that in our archives they are. >> today the senate blocked a move to involve employers to walk out of health coverage if they have moral objection. the blunt amendment was tabled in a 51 to for tivo. here comments for majority leader harry reid and minority leader mitch mcconnell. this is 15 minutes. ideolog >> today the senate will vote on an extreme ideological amendment for the bipartisan transportation bill. the senate takes aim at women'sw access to health care. that would allow any employer oy insurer coverage for virtually any treatment for virtually anya reason. or i repeat. it will have any employer or viy insurer for virtually any any treatment for virtually anyhat reason. i was pleased to hear senators

now intends to support this measure. i read that lastig night. although the mousers dying to lt restrict contraception would limit all a americans access to essential health care. here are just a few of the this treatments and players couldhard deny this amendment passes. be. hard to comprehend, but here's the summit be.ings. mammograms and other cancer screenings. scr prenatal care, flu shots, t make matters worse, jobs b republicans how they progress on an important jobs failed to extract this political vote. fin as the economy is finally moving forward a little bit, republicans have tried to force congress to take his foot up the gas. it has nothing to do with highir rates of ridges or trains or train tracks. this amendment has no place on a transportation bill. that was 2 million jobs can thursday, the senate cannot

creating measure any longer. democrats have agreed to vote on senator blunt amendment so we te can hopefully move on.isan pical once the senate disposes of this partisan political amendment i hope will be able to resume in b earnest bipartisan work on a transportation bill.ve spent >> mr. president.y >> republican leaders recognize. >> us and a lot of time in my amendment. most of the time i focused on the part that deals with freect prent's speech. mae recent actions by the obama administration related to the president south carolina prompted many of us here and in many across the country to stand

up in defense of another freedom covered in the first amendment m and that is religious freedom.t and let me just say at thethis outset that most of us didn'tonf expect we would ever have to defend this right in a body which every one of us is sworn to uphold and defend the u.s.los constitution. most of us probably is said tha, if religious liberty were ever seriously challenged in this rur country we could always expect a robust bipartisan defense that . leads from within the congress itself.e unfortunately that is not the situation we find ourselves in.a democrats have evidently decided they would rather defend the president of their own party negardless of the impact of hisi policies. so that they then defend the first amendment in this particular case, they decided tc engage in a campaign oamf distraction is aware that scaring the larger issue, which is at stake here.emocrats but if democrats no longer see the value in the first amendment

because they don't think it's or otbecause they want to protet the president, then republicans will have to do it for them.o and we're happy to do that because this is an issue that it greater than any short-term a politicalt gain. w a it gets right at the heart ofre who we are as a people and we welcome the opportunity to about. what makes america unique in the world is the fact that it is established on the basis of an r idea. the idea all of us have been endowed by our creator with certain unalienable right. in other words, rights confirmed not by a cane or a president or sit in the congress, but by the creator himself. the state protects these rights, but it does not grant them. and with the state doesn't grant, the state can't takecorde away.ho now the first of these rightsha

according to the man who at the u.s. constitution is the right to have one's religious beliefs protect it from government interference. the first amendment couldn't beb clearer on this point. neith the ergovernment can neither it establish religion nor can it e prevent thexe free exercise.ise and if the free exercise it religion cause of the first n amendment means anything at allo he means it is not within the power of the federal government to tell anybody what to believee or to punish them for practicing those. beliefs.s and precisely what the obama administration is trying to do to the president of your love. we all remember then speaker to pelosi saying we would have to pass the health care bill to find out what was in it. ts well, this is one of the thingss we found. was it empowers bureaucrats here in washington to decide whichigious tenets religious institutions cn can and can't adhere to.

if they don't get in line, pen they'll be penalized.his according to congressional testimony delivered this week that it was not prudent of thes becket fund for religious liberty, this is not only unprecedented federal law, but broader in scope and narrower se and its exemption on the 28th state mandate that some appointed to in the administration's defense.s w moreover, even in states with ee strict as mandates, religious institutions can still be there ought to have was self-insured.t but if they try that now, they run into this new federalime mandate making it possible for the first time in religious institutions to avoid punishment for practicing what they preachy now some of the proponents of case, we should just ignore the first ame amendment. that is what the proponents arey

saying. in this instant, just ignore the first am qendment. this is a certain religious beliefs in question are particularly popular, so they don't really deserve first amendment protection. amend but isn't that the entire point of the first amendment? to protect rights regardless of is not the reason people came ta this country in the firstce plaa os a refuge from government whot set a head to toe the majority e line? sai they' some of the proponents of this mandate of also said they are willing to offer a so-called compromise that would respect what they call a core mission of religious constitutions. but here's the catch. they want to be the ones to tels these religious institutions with their core mission is.missi the government telling the g religious institution with the core mission is. c that is in a compromise.

that's another government t isne takeover. by this time it isn't the bankss for the car companies. i mean, who do you think is a better grasp of the mission of the catholic church?or the the cardinal archbishop of new york were the president's campaign manager? he q who are you going to listen to on the question of whether this reli mandate violates freedom ofs on religion? the president of one of the largest seminaries onr the plat washington? the question answers itself. vote, this is precisely the kind of thing the founders feared.reo it was precisely because of then danger of a government intrusiot into religion like they findhe that they left us the first amendment in p the first place o that we could always point to it and say no government, no

government, no president has beenat a great. religious institutions are free to decide what they believe intr the government must respect their right to do so. many and remember, as many of us said during the debate on the bl, president's health care bill, this is just the beginning. compel people to buy health care, it wants to their. th now it's telling people what their religious beliefs are ands what their religious practices ought to be. i wonder what is next. let's be clear. this isn't about one particular religion. it is about the right of americans of any religion toe gv live out their faith without the government picking and choosing which type trends they arehey're allowed to follow. when one religion is threatenede our religions arene threatened s allowing this particular infringement would surely ease the way for others.

this is something mytuents u constituents understoodndy in immediately in this debate. r i've received a lot of letters for legislators and concerned oe citizens who know an attack on the belief of one religion is ag religion. many of them make the case a lot better than i can sidelight to just share for a moment somen thoughts from my constituents on this issue. i'll start with the catholic cat archbishop joseph curt. here's what he wrote. the federal government, which people has just dealt a heavy blow to almost a quarter of thoe those people of the catholic mis population. into the millions more who are served by the cat that people in endmen so ruling the administration is cast aside the first amendment of the constitution ofth theoli united states coming tonight to

catholics or nations first and most fundamental freedom, that of religious liberty. we cannot, we will not comply with this unjust law. people of faith cannot be made second class citizens. here is what bishop ronald cathi gainer of the diocese of lexington had to say. say: civil law in civil structures should recognize and protect the church is right and obligation to participate in a society onthout expecting a for forcingd us to abandon our compromise our fundamental moral convictions. i if we have an obligation to val teach and get eyewitness to moral values that should shape o our lives and inspire our society, then there is a corresponding obligation that ssuld be allowed to follow anxpe express freely at those vues. religious values. fre anything short of government protection of the freedom represents an onboard tape pratap of governmentuniversity t

interference. here is the president of the university, jim taylor.o t the intrusion of the exe administration in the right of the free exercise of religion i- disappointing.ith the choice to interfere withitha religious hospitals, charitiesgi and schools to mandate violatins religious views is disconcerting and will in all probability be totally counterproductive. further polarizing this nation. finally what to read a letter. from dr. r. albert mohler junior.nt of i mentioned earlier. he's the president of the southern baptist theological seminary, flagship school of the southern baptist convention one world. i'm going to lquoted inik full minute like to submit it for thr record. here's what dr. mohler had to say. i write to express my deepest rg concern regarding the recent policy announced by the department of health and humanri

that will require religious institutions to provide mandatea to and antiabortion services to employees. this policy announced by by secretaries billy is transposedh the religious liberty of american christians who are known for better colleges, schools, hospitals and other service organizations must violate conscience in order to comply with the affordable care act. the exemption announced by the obama administration is so intentionally narrow that iter hall cover on the congregationst and religious institutions that employ and serve only members of their own faith. ser this exemption deliberately

excludes christian institutions erat have served this nation ans its people through education, social services and health care. the new policy effectively tells christian institutions that ifnu we want to remain true to our convictions and our conscience is, we'll have to see serving pt the public. million upo this is a policy that either require millions upon millions of americans to accept a gross and deliberate violation of religious liberty or exceptac te total secularization of all education and social services. christians of conscience are now informed by your own government that we must violate her convictions on a matter of great theological and moralthis inot a significance. this is not a catholic issue.thu the inclusion of a torsion forms of birth control such as emergent the kids will violate d

others who share these convictions.es, the religious objections to this of teaching, belief and moral instruction. she goes on. an this policy is an outrage thatao violates their deepest constitutional principles and ft tramples religious liberty and d the defeat of deliberateelders legislators have indicated, we cannot comply with this policy.a the one-year extension offered by the obama administration is a further insult providing a year in which we are by government mandate to prepare to sacrificed their religious liberties inviolate conscience. i along with the lives of other americans humbly request that the congress that the united states provide an immediate and effective remedy to this intolerable violation of religious liberty.

please do not allow this abominable policy to stand as ms the protection of our most basic and fundamental liberties now rests in your hands.so, so mr. president, i'll concludee with this.th debate, if there's one good thing aboutp this debate, it's that it hasre given us all an opportunity to reaffirm what we believe as americans. this it gives us an opportunity to stand together and say this is what we're all about. a this is what makes america unique. this is what makes it great.that that's why i'll be voting for eh the blunt amendment. and that is why it is nice this fairhope that the president and those in his administration come around to this view, to appeara that they comefr to realize thae the outpour we've seen across the country that the free anddos diverse exercise of religion in this country has always been one of our nation's greatest asset.

at one of the things that truly sets us apart as i said at theri outset of this debate, and that the president reconsiders this a deeply misguided policy and reverses d it. be it crosses a dangerous line. it must be reversed. but if he does that come to either congress or the courts will surely act. >> view is that in 2006 the road would be begging for the united states to use force in the middle east within three and a half years, everybody would've said you were crazy. >> what i've been writing for years actually as there is a lot of continuity in foreign policy, more than we expect. a broad consensus on what you see here is the kind of consensus that exists in the foreign policy community and there's a lot of overlap between the two parties.

>> and with a firm confidence and justice and peace on earth that will raise the haaretz in the hopes of mankind for that distant day when no one battles a saber and no one tracks the chain. [applause] it is further the cause of republic to restore the clear understanding of the tyranny of man over man in the world at large. it is our cause to dispel the foggy thinking, which puts our decisions in a delusion that a

world of conflict will somehow mysteriously resolve itself into a world of harmony. >> housing secretary shaun donovan said the federal housing administration has the resources to back its portfolio of home mortgages. the fund which has been depleted by the housing crisis would be replenished through increased fees and money from the recent legal settlement with big banks for their lending practices. secretary donovan testified before the senate appropriations subcommittee on housing and urban development that this hour-long hearing. [inaudible] >> -- 2013 budget request for housing and urban development. as we begin our work on next year's budget, there are encouraging signs that our economy is moving out in the

right direction although we are moving quickly enough for families that continue to struggle but we certainly have a long way to go come the private sector has now been adding jobs from us two years. businesses are growing at confidences. we seem to setback finally from the precipice which of course is good news for the housing market which depends on a strong and stable economy to recover and thrive. despite the positive signs we still face significant challenges. over 22% of homeowners are underwater. the recent settlement announced among the five largest banks, state and federal government is an important step that was takes account of them provides relief to homeowners. the settlement also paves the way for banks to proceed with foreclosures that have been stalled in the pipeline. while it is important to reduce the excess inventory of distressed housing can increase sales of these properties that reduce prices made further depress home values.

climbing back from the housing crash will not be easy and i'm interested in hearing your views on how we can increase the stability of the market. the depressed housing market is also taken its toll on fha. this is made clear the presidents budget. the budget indicates for the first-time fha may require federal funding to cover his losses. i've long been learned about the solvent get fha's mutual market insurance fund and i applaud the efforts of the administration to strengthen fha's risk controls. many potential problems facing fha related to older business insured at the height of the housing boom. so while these changes to string the program are important and long overdue, it will also be important to recover or prevent older lives. i am pleased the recent market settlement includes money for fha and other supplements most notably bank of america will also provide money to cover losses related to improper

mortgage origination. the settlement should help avoid the need for taxpayer funding and i hope you'll continue to look for opportunities to recoup losses from fraudulent or poorly underwritten loans. additional changes to fha premiums contained in the budget as well as those announced on monday represent your continued efforts to improve solvency of the mmi fun and protect the taxpayer from having to cover his losses. beyond fha will examine other aspects of the administration's request, which is 44.8 billion engross resources to support program. while this represents an increase of over 3%, is largely a current service budget as a result of the numerous aspects in fiscal year 20 tocqueville. as the secretary's testimony notes, 83% of the budget is dedicated to providing housing of the nation's most vulnerable in these programs require annual

adjustment. as we continue to live under the caps of the budget control act, this prevents presents us with difficult choices. senator collins and i were tired to project the assistance program. doing so meant difficult cuts to programs like cdbg, home and housing for the elderly. it began in fiscal year 2011 been widely felt today. cities and towns cutting services to vulnerable citizens and laying off workers or delaying critical investments in their community. this is budget faces many of the same challenges we struggled with last year. have you craft a budget that protects low-income residents who rely on assistance to keep a roof over their head, and makes the economic investments to strengthen our communities and give the tools it needs to effectively manage its program. while the administration is the year 2013 budget tries to address by balancing priorities

and concerns about some of the proposals. the proposed budget for project-based rental assistance will manage within the requested level by intentionally not funding contracts for a full 12 months. i see this policy before the law may be manageable in the short run i'm concerned they won't have it when the bill becomes due. net-based rental assistance account i'm also concerned that funding will have a request to renew vouchers effectively flat. despite anticipated inflation and the need to renew vouchers for the first time the budget also relies on savings from a drug policy changes which are not without controversy. so as to make the difficult choices in this budget i want to be sure we make decisions with an understanding of the consequences and an eye towards the future. despite my concerns as bright spots in the budget. the request again seeks 75 million for new vouchers, which has really helped reduce homelessness among veterans by

12% between 2010 and 2011. the administration is returned to develop a plan to finally end homelessness in the very glad the request for programs as they continued commitment to that plan at a time when resources are scarce, oversight of programs becomes even more important. i look forward to continuing to work with the department of my colleagues to find additional ways to improve the program. i also want to acknowledge today the new inspector general, mr. montoya with us today. welcome his vision for inspector general that earth to rick and attempt to protect taxpayer dollars and improve hud's program. the fiscal year 2013 budget once again requires difficult choices to be made. as they work with my colleague and those on the subcommittee to put together this bill, i will be mindful of the millions of americans who rely on hud's programs for a place to sleep each night.

mr. secretary look forward to a discussion and working with you as we develop the 2013 budget. i appreciate everyone accommodating us in moving this hearing up and thank you for accommodating us as well. we have a vote in an hour and 20 minutes in senator collins and i both need to be on the floor. let me turn it over to my colleague, senator collins. thank you for being here. >> thank you very much, senator murray. her son is say how much i enjoyed working with you last year as we crafted this important appropriations bill. we did so in a truly bipartisan fashion. we share a lot of the same priorities and it was also a great pleasure to work with secretary donna ben and i appreciate his being here today as we discuss how to meet a housing and economic development needs of family needs across our nation. as we begin to construct the

fiscal year 2013 budget, we are mindful that we are once again operating under very difficult fiscal constraints. that is even more challenging when one considers that more then 80 cents out of every dollar of the budget request is required just to continue serving those who currently rely on hud for just housing support. addressing the ongoing challenge of homelessness remains a top priority of mine. chairman murray and i continue to share this commitment, particularly foreign nations veterans that we were very hard last year to preserve funding for the hud program. one out of every six men and women in homeless shelters are veterans and unfortunately,

veterans are 50% more likely to fall into homelessness compared to other un-american. so i am pleased that the budget request continues funding for the hud program at $75 million. this level of funding should help us serve an additional 10,000 veterans who would otherwise likely be homeless. veterans homelessness style by nearly 12% in the year 2010, demonstrating that these programs work. i've also always supported funding for the homeless assistance grants programs to event and end homelessness. the budget proposes $2.2 billion for this program. that is an increase of approximately 380 million over the previous fiscal year. it is however important that we focus on what works.

one of the models that i've seen work in the state of maine is the housing first model for aiding those who are homeless. we need better data to ensure the effectiveness of all housing programs. this particular model is proving its effectiveness in my home state of maine through the floor and pass, a comprehensive center for homeless women in portland. in addition to programs that effectively serve the homeless, hud of course provides support for affordable rental housing. the budget proposes more than 18 billion for the tenant-based rental assistance program of which 1.6 billion is available for administrative tasks. that is an increase in direct response to the fact that some public housing agencies are having a difficult time at ministering their voucher

programs and it actually turned back vouchers as a result. and that is very troubling. we don't want to overpay them for their administrative expenses, but they need to have sufficient expenses to efficiently and effectively run the program. another important issue at play to address is has oversight of the maine state housing authority section eight voucher program. a series of recent newspaper stories reveal troubling codes in cases of code violations another poor conditions. contact the local fire chief was so upset that he wrote a letter to my office asking for my help. how does an obligation to oversee the use of federal funds and public housing agencies nationwide and to ensure that these funds are not supporting

substandard property? i just want to share briefly with my colleagues and the people from the hud here and inspector general one of the particular units, one of the apartments that were cited in this newspaper series. pod was actually paying $600 a month in federal subsidies for an apartment that had septic backups in the kitchen sink, a damaged fire escape and bat and rodent infestation. totally unacceptable. it's bad enough taxpayers were charged for substandard units, but it is appalling that residents were forced to live in such horrible condition. the welfare state to tenant must be safeguarded in federally subsidized property must represent good value to both the tenant and taxpayer life.

the inspector general of unit inspections in the mainstay of a housing authority of the program. it's critical that federally subsidized comply with all health safety and quality standards for taking my concerns very seriously and for asking the maine state has had already for corrective action plans that i'm also very pleased that the ig has stepped 10 and is investigating this problem. i too want to ask senator murray's concerns about the federal housing administration which played such a critical role in the portable code ownership. the decline in the housing market over the past several years had a tremendous impact on

communities throughout the nation as well as our economy as a whole. i understand it's taken a number of steps to increase capital reserves, it remains troubling that the capital reserve ratio remains below the congressional union deeded level of 2% and optimistic we'll hear good news is the result to the settlement, but that still is of concern. i also want to discuss in the question. but the secretary the greater use in names that have not qualified for assistance under the fha program and those are increasingly popular. they are an internal and today is to fossil fields a very heavily dependent on machine home oil.

finally, the levels for development block grant programs proposed about $3 billion is disappointing. this prop your program supports nationwide and enables key investments in our long-term economic growth. it's programs like cdbg that help to build the foundation for future prosperity. these are some of the issue and they send again madam chairman look forward to working very closely with you again this year. >> thank you very much, senator collins paperback, we'll turn it to you for your opening statement. >> thank you for allowing me to be her today. like a discuss how the fiscal year 2013 budget proposal is essential to creating housing and communities built to last them the trick tracker supports

seven. madam chair in developing the proposed budget with software principles. the first is to continue support for the housing market will bring in private capital back through the critical support fha provide the last three years is up nearly 2.8 million families buy homes and more than 1.7 homeowners refinance into stable affordable products with average monthly savings in more than $125. at the same time is taken a significant steps in fha history to reduce risk to the taxpayer ever for fha's mortgage premium structure. the premium increase to 10 basis points recently enacted by congress coupled with additional premiums on jumbo loans reflected in the budget. fha projects to add an additional $8.1 million in receipts to the capital reserve account in 2013 and just this week we announced a premium changes that will increase receipts to fha about those already in the budget by over $1 billion in fiscal year 20

child and 2013. we've also taken significant steps to increase accountability for fha lenders continue to seek expanded authority via legislation. it will further enable us to protect the fund. as for the recent settlement with some of america's diverges servicers through which fha will receive approximately $900 million to compensate for losses associated with loans originated or serviced in violation of fha requirements. with fha's current market share declining since 2009, these reforms will further help private capital return on ensuring that fha remains a vital source of financing for underserved virus and communities. just as important a wall has fiscal year 2013 request is 44.8 ileana gross budget authority, because of fha, the cost to the taxpayers on the dirty 5.3 billion, 7.3% below the fiscal year 2012 enacted level.

more than maybe our deficit reduction target will still allowing us to improve oversight of our core program. the second principle is to develop our budget was protect current residents had approved the program that serve them. the 5.4 million families who live in assisted housing or intent as in $200 per year as a medium and more than half are elderly or disabled. that is way 83% of our budget if you both recognize keeps these residents in their homes and provides basic upkeep to public housing will also can continue to serve our most vulnerable populations who are homeless programs. as you know, inflation and stagnant incomes over pressure on the cost of programs each year. this year we doubled our efforts to minimize the need in these increases, not just for this year but the years to come. for instance, we are working with your colleagues to enact section at reform legislation

that would save $1 billion over the next five years while also supporting the ability of public housing authorities in small towns and rural areas to better serve the working quarry. the budget also receives savings for project-based rental assistance program by improving oversight of mark arent studies, capping certain annual subsidy increases in not setting excess reserves. even still, protecting current families require us to make choices who would not have made in a different physical environment. requesting a $.7 billion for the pv array program allows us a certain number of families that allowed us to less than 12 months of funding for the majority of contracts reared in addition, even in the budget maintains hardship exemption for budget raises minimum rents rhetoric or rental assistance programs to a uniform $75 per month. these very difficult decisions are the kinds of steps we were required to take in a difficult budget environment.

that is where a third principle continuing investments to leverage private dollars and create jobs is so important. the choice neighborhoods program how communities engage a broad range of public and private partners to transform our poorest neighborhoods and ensure children are prepared for the 21st century economy. as the president said if we go compete with china and india we can't leave anyone on the sidelines spirit likewise are sustainable communities grants challenge communities to creatively use resources that help them in source and bring jobs back to our shores. advanced searches using the committee challenge grant to more effectively spent on state resources the neighborhood surrounding international airport, the party created 3000 jobs in companies like electrolux india for sale are poised to create another 1500. when the fiscal environment has made tough choices, dollar for dollar the most effective job creators is grants are essential

because they leverage limited resources of core programs even worse and efficiently. indeed reducing regulatory burdens and efficiency is the fourth and final principle leads to formulate this budget. the budget provides flexibility for ph is to better manage its fiscal environment and hold our partners accountable for funding they receive it also continues her transformation initiative. we could hope for continuing the next generation management system that will improve monitoring and oversight of the largest rental assistance program and launching a crosscutting technical assistance initiative targeted to pha so they have capacity to manage their budget. t.i. research also allows us to propose in this investment in programs we know work at permanent supportive housing record we have seen that end homelessness and save money. that is high even in this difficult environment as both of you have championed, we propose additional funding for homeless assistance grants in the hut program for homeless veterans insuring we can and homeless

mass by 2015. all told despite tough choices to propose special office to serve 27,000 more families if recognizes to recover the housing market essential to our broader economic recovery and expresses the belief that every american should get a fair shot coming to their fair share of play by the same rules. thank you for having me here today. >> thank you very much, mr. secretary. then he began by asking about the status of the fha is mutual mortgage fine. given the seriousness of the housing crisis, it's not surprising that fha sustained significant losses in the capital reserve account has served its purpose by that covering those unexpected losses. as concerned with the president's budget stated $680 million would be needed to cover fha losses in fiscal year 2012. at the recent settlements and

announce premium increases are expected to improve the financial position. but i want you to update this morning on the financial conditions of the mmi signed at the fha. >> as you correctly stated, the information in the budget was outdated on the day it was published in fact we were waiting to make final decisions about premium increases until we knew the outcome of the settlement. i wish that had been resolved before the budget was finalized, but it wasn't. and that is the reason for a shot in the budget. having said that with the $900 million today describe, it is the results of our work to recover for bad loans in the fha program in the settlement and in addition the premium increases that we've announced this week, we do expect that the fund will remain positive this year. in addition, because that those

steps that we've taken, the fund will be in a stronger position when the next actuarial study is done in the fall. that is the most comprehensive book, as you know, looking forward. and we do expect that it will put us, the changes we made will put us in a significantly better position come fall. but again, we have to be vigilant it will take additional steps if necessary. the single most important step in the help of the fund is where house prices go this year and beyond and so we will continue to be vigilant and watch carefully to make sure that we have additional steps we need to take that we can work with the committee to take those. >> so what other risks and opportunities for me to look at, the housing crisis this year, what other things quite >> specifically for the rest of it this year, the only things that affect this number are the

premium increases and so implementing this very quickly is critical and the level of loan volume at how this year? our estimates are that take loan volumes more than 20% below where expect haitians to threaten the fund through three estimate this year. more importantly for next year as we go to get the new actuarial study, the single most important factor is house prices. our estimates last year showed that it would take greater than a 4% reduction in house prices this year. our base case predicted a 1% increase. ..

and four, so for those borrowers the average size of the loan is much larger and the increase would be significantly larger. >> thank you.

the settlement with bank of america represents not only a significant monetary award that also would send a message to the faa program% said -- purges bent that there are serious consequences and not following the rules. last week to additional lenders were announced and most of the mmi funds for stem from the insurance prior to the reforms implemented in 2009 is really important to pursue opportunities to prevent a recovery of lost from those books of business. are there additional measures fha can take to improve the outlook that they are to have on the books? >> there are an first of all let me compliment our inspector general and his team for their remarkable work to lead to the service settlement and the additional settlements. they partnered very closely with us and doj to allow us to make those recoveries not just in the and settlement but from b of a,

citibank and flagstar so those are very important steps and i want to complement him and his team. the additional steps that we could take, there are a number of them that require legislative change. i'm happy to say we are working closely with your colleagues on the authorizing side as well as members of the house and the authorizing committee. there is a bill in the house that includes a number of steps that would allow us to step up our enforcement and those build on the recent regulation on identification that we put out which will allow us to further hold lenders accountable for those prior loans that didn't meet fha standards. >> what you know we all think fha current outside rome the market is sustainable and there is no one that doesn't think differently but it still remains difficult are all americans to get a mortgage today than the markets recovery as we know is still very fragile. if it changes quickly could have

serious consequences not only for our overall economy but the mmi funded by one to ask you how you balance the continuous need for fha to help provide access to credit with making room for private capital referring to the market? >> senator you have asked the 64 trillion-dollar question. this is what keeps me up at night and this is exactly the key question that we have to balance. frankly it's not just helping the broader market recover, but if we were to take steps to increase their premiums to quickly to take steps that would hurt the market recovery, we actually hurt the fha fund and the taxpayer because they're on investment, the trillion dollar portfolio will perform much worse. so in the steps that we have taken, and you asked exactly the right question, what is the effect to the average homeowner? we felt that $14 a month on

average was acceptable particularly given we have record low in just rates today. we honestly feel the biggest beer you're holding back lending and i agree with you too many qualified or worse aren't able to get lending. it isn't the pricing that is the biggest barrier. it would be if it went to quickly on raising our premium. the biggest challenge is the uncertainty that is out there in terms of how we will enforce our rules so we have to make clearer what the rules will be. that is why our indemnification rule clarifying is why fha needs to put out a clear policy on buybacks that will allow fannie and freddie lenders to know what to expect and it's why the servicing settlement was important as well. it created a single clear, strong set of servicing standards and clarified foreclosure processes around the country so that the market can move forward with greater certainty. again, it's always hard to get that balance perfectly.

i sleep on this every night but it is a critically important balance and i just thank you and the ranking member for your understanding of that balance. >> very good, i appreciate that. thank you. >> thank you madam chairman. i want to go back to an issue that senator murray touched on in her opening statement. i am concerned by the administration's proposal would thousands of rental contracts for less than 12 months. the reason i am concerned is that short funding that these contracts may repent a perverse incentive for landlords not to invest, to cut expenses, to reserve because of the risk of whether or not the full appropriation for the remainder of the year are going to come

through. i am also troubled that some owners may decide to leave the program altogether rather than take that risk. i know this had to be a difficult decision and it clearly was budget driven, but how is that going to mitigate these risks to the program and to the residents? >> senator first of all let me say thank you for recognizing this issue. this was one of the most difficult decisions be we made in our budget. personally for me having run the multifamily program my first time and had it was particularly difficult because they know the impact. what i would say is there are two real risks here. one is an operational risk that we will not be able to mechanically get the contracts funded with the short funding. that happened in the past when

these contracts were short funded and i can assure you that i and my team have worked very hard to make sure that the operational are improved and in fact over the last four years we haven't had the those same kinds of issues that might come up with the short funding. we also operationally have taken a lot of steps to make sure we have the process in place to monitor the fiscal condition of the unit so you're concerned about will this lead to decreased maintenance, we have new ranking reporting that we do on the scene is. we quality control around our process that we have step up. those are all things that are critical to make sure that the kind of effects we talk about don't happen. >> the other risk is an uncertainty around funding and he mentioned that as well. and that is one where frankly because there is private capital that supports these units, it is critical that we not create too

much uncertainty around these programs and i do think that is one of the risks here. what is very important is that we work together to make very clear as the congressman has always done that the funding is available or these units. we signed 20 year contracts knowing they are dependent on appropriations each year in the market has been confident that funding will be there. we want to make clear despite the short funding that we will do everything on our side and i know you will as well to continue this funding and make sure it's available in subsequent years. >> let me now turn to the issue that i mentioned in my opening statement about the poor living conditions in some of the hud subsidized units. i am troubled by this not only because taxpayer shouldn't be paying for poorly maintained units, but the health and safety of the people living there is

clearly at risk. so something dramatically went wrong with the oversight and inspection process. i am also troubled last year when we learned of the outright fraud and some of the public housing agencies. i believe one in philadelphia in particular was found to have fraud. so what investment is hud making in this budget to ensure that you have quality controls, internal controls and a close relationship with the ig to ensure that we are not wasting taxpayer dollars on substandard units that are unsafe for the tenants gore where people are

stealing money that belongs to the taxpayers and has not in the pitted those who need it most? >> senator let me just thank you for your directness and your focus on these problems, both u.n. senator murray. where their issues, where he had made mistakes in this is clearly, there were mistakes made on these units, you have been direct and held as accountable to correct them. i hope you will agree that when we discover these problems that we work very closely with you, with david montoya and i want to really recognize him and his team, and we are taking steps specifically in maine that i think will lead to better management going forward. the contracts with the inspectors, the companies that were doing the inspections have been brought back in-house to improve the inspections there and we have a very specific plan that we are monitoring for

corrections of other quality control within the main housing authority to make sure things are better. you rightly.it, what lessons can we learn more broadly from the work we are doing across the country? there are really three things there. one is we have to make better use of our existing resources, staff and our partnerships with the ig to improve oversight. we have in our budget or posed shifting public housing staff into field offices to increase direct oversight. we also make sure we are utilizing our enforcement center which previously didn't work as closely with public housing authorities. just in 2011 and so far in 2012 we have used the enforcement center to review 140 public housing agencies across the country so that is a better use of existing resources. the second, we have to do better

in core dating our inspection system. to date we have one inspection for a project-based units in public housing and we have a separate system for voucher units. what we have started now is a pilot to use our sections for quality control and oversight where they will go behind local inspectors and make sure that the results they are getting are in fact accurate and that is something we plan to expand especially in the future, to merge those two systems so we have a single set of strong standards for inspections across all of our programs. the third thing is, with your help the investments we are may keane and investment technology. our next generation management system for our voucher program will allow, just to give you one example, right now we don't have the ability to look at the photographs that are taken on those inspections. there is nothing that replaces actually seeing with their own eyes what happens.

the system will allow us to download anywhere in the country the digital photographs taken on the inspection that local inspectors are doing and that is just one example but there are a whole series of things in that next generation management. one of the two biggest priorities you have had in you held as accountable to invest in those their information technology. we couldn't agree more that that's a critical step we have to take. >> thank you. i do want to salute you and the inspector general for your response to the problem in maine and across the country. it's amazing that you don't download the photographs. i can lend you my blackberry to do it. [laughter] even i can do that. it's clearly a feasible step that should be taken. just one very quick point, another thing that i think the department needs to look at is,

if you have bad actors out there, you do have available to you suspension and debarment tools where you can prohibit an individual or even an agency involved in your program for a period of time. i would encourage you to make more use of those tools in egregious cases. >> what is the timeline on being able to download those pictures? >> so we have, we will follow up with detailed information on all the different steps. those first pieces of the next generation management system are going into place this year. i think it's within a few months that we but we will have the photographic capability that i talked about. >> makes a huge difference so i appreciate that and the the i echo senator collins' concern on

the project-based contracts that we will be following that very closely from our and. you know, you mentioned in your opening remarks that the programs that directly support the mission of providing housing for low-income low income americans most who art elderly or disabled is 83% of the budget. when we have continued difficult challenging strained resources, no the programs place a lot of pressure on cutting the budget. the largest of those rental programs which of course are section 8 vouchers used by residents in the private market. in the sears budget the level of funding that is requested to renew those existing vouchers is essentially flat. while the budget does assumed savings associated with programmatic changes to doesn't appear to be sufficient to cover the cost of inflation and renewing incremental vouchers for the first time. i wanted to ask you how you

expect fha to maintain their existing voucher portfolio without those adjustments? >> two things i would say about this madam chair. first of all and i think you all have been very focused on this for a number of years is how do we balance making sure we protect every family was sort of ending the cost curve if you will of the renewals on these programs. through the budget this year, we are proposing a whole series of steps that would allow us to serve the same number of people, at least the cost is relatively flat. some of those are choices i think we can all agree are ones that are common sense and some of those are tougher decisions and will obviously need to be discussed with the committee and get your views and them put on brothers, those make sense.

specifically in the tenant-based program there are over $200 million of savings we are proposing to achieve. the single biggest is to change our income targeting in rural communities to make sure that war of the working poor can be eligible for vouchers to be part of the old voucher reform act that we are hopeful will pass in the house in the coming weeks and that we would be able to implement. i think there is broad support for it but we also have made proposed changes in the medical expense deductions as well as the minimum rent that would allow us to serve a number of people. to be very clear we are maintaining our commitment to serving all families there but it did require taking a number of steps to try to lower costs next year to keep those flat and to allow us to have lower renewal costs in the out-years.

the other thing i would just say briefly is that an important piece here as you both recognize, is what it takes to manage these programs. we have been very concerned that we had to housing authorities in milwaukee and akron that turned back cash vouchers. i've never seen that before. imagine the idea that housing can't serve more homeless veterans and just in january alone we had 13 different housing authorities that made the decision to turn back their broader voucher program. because they were concerned about the ability to find those. fund those. last year's budget made it difficult decision to fund the ad men fees at just over 70% and terms of the overall need. we are proposing a significant increase to get above 80% but we still think even with the

choices we are making that there is still some risk the housing authorities wouldn't not have enough so particularly that line adam fees is a critical piece we will need to discuss work on this year in the budget. c. let me ask you about that because your request is prioritize section 8 administrative fees which have been tested in recent years. administrative fees aren't an exciting part of the budget so did you fund the basic operation? i know you struggle with a lot of choices but can you explain why you prioritize funding for administrative fees? >> clearly the concerns we had that i have just mentioned about the number of housing authorities that have made the decision not to serve additional veterans, the number of housing authorities that just in january alone have determined that they

did not want to continue with their voucher programs were critical in terms of that decision. and let me give you the precise numbers of what has been happening to add men fees and what we are proposing. first of all, in 2012, it was a 74% proration that we estimated for the budget. for 2013 what we are proposing is an 81% proration. in 2011 just to give you -- or 2010 i'm sorry, to give you an example of where those fees were previously, it was a 90% proration in 2010 so even our 81% represents a reduction if you go back a few years and that leads to some of the concerns i mentioned that even at 81% we

were allen sing difficult decisions and i had concerns that wouldn't be enough for some housing authorities. but i would also point out it represents a significant increase in absolute dollars from where we were last year and just looking here for the exact number of what that is to make sure. let me get that to you in a moment that there is an exact number in terms of the increase we are proposing this year in the budget. >> i have a couple more questions and i will turn it over to senator collins. >> thank you madam chairman. i'm just going to ask one more question because i have been called to the senate floor. this one too is one that i referred to in my opening statement and it's extremely important to the city -- the state of maine. maine is the most heavily dependent of any state in the nation on home heating oil and when you see the spikes in oil prices that we have seen this

year and the cutbacks in the low income heating assistance programs, it is causing tremendous hardships for so many of our families in maine. it's also difficult because maine has the oldest housing stock in the nation and there are a lot of homes that are poorly insulated and that would benefit rum weatherization projects. that is something we ought to assess more as well. the large swings in oil have cut many of our -- caused many of our residents to look at alternatives and the wood pellet boiler industry is growing rapidly in maine. it has the potential to help out these families and to allow them to burn oil but also to create thousands of new jobs in our state. wood pellet manufacturing, boiler technology and talent

delivery systems have progressed dramatically since the days when you had to scoop pellets from small bags into a small stove every couple of hours. now the industry has developed boilers that don't even require any human intervention during the day. there are automatic deeds of pellets. hud has been slow to consider would pellet boiler system as an acceptable conventional primary heating source. the reason this is important is for purposes of qualifying qualifying for fha programs, you have to have a conventional primary heating source. i wondered if you could tell me if hud is looking at including these new wood pellet boilers as

a conventional heating source, which would help more families in maine have the confidence that they could convert two wood without losing their eligibility for fha and other federal housing programs. >> senator first of all that let me thank you for raising this issue and putting it on our radar screen so to speak that had. just as we talked about with your blackberry a moment ago, think we can all recognize there are moments where the federal government and government in general could be a little bit behind the cutting-edge in terms of new technologies. i am happy to report not just that we are looking at this but just yesterday we updated our frequently asked questions on our web site to tell all have tell all of our lenders are an acceptable heating system for homes under our insurance program as long as they meet the call of occasions that any

heating system has to be necessary to -- acceptable technology. we are in the process of our handbook reflecting that and not only have we considered it but we have considered a made the decision that you're absolutely right and we should include these in our program so thank you for bringing it to our attention. >> that is absolutely great news and again i thank you so much for your willingness to look at that. that technology has changed so dramatically and that is going to be great news to a lot of homeowners. thank you very much. >> i will be coming to borrow your blackberry later. [laughter] >> anytime. >> thank you very much senator collins. mr. secretary or budget associated with pro-committed changes to the hud rental assistance account including tenant base and project-based section 8. you talk about this a minute ago but many of those cost-saving measurements require legislative changes which would involve

rulemaking. what will happen if your savings estimates and the proposed reforms are not enacted or they are enacted late in the fiscal year in the rulemaking process? >> first of all senator to get back on the specific number i was looking for before and the increase we are proposing on add men fees is $225 million this year so it is a substantial increase in one week thought even a in a tough environment was absolutely critical. as i said we think it is the minimum to try to get more confidence that housing authorities will be able to administer the program. specifically on your question about legislative authority, i am happy to say that with your urging we are working very closely with your colleagues in the house on the authorizing committee and in the senate here and i'm optimistic about getting that legislation passed.

the large majority of those changes would not require extensive rulemaking. there are a very few that would require rulemaking and they're really around the old rant programs with a large majority we could implement through a notice. if we do get the legislation passed we could implement them quickly and be prepared for 2013 to be able to implement them and get the savings we are protecting. obviously if the legislation does not pass, that would stop us from being able to achieve some, but not all of the savings. we do have a share that we could achieve without legislation and i would happy to follow up with the specific analysis that shows you precisely what we could do on a regulatory basis of the 920 million we are proposing over the major program. a significant share i think we could do without any legislative change.

>> okay. if we could see that, that would be great. even if we are able to achieve these changes at the beginning of this fiscal year we have heard concerns of some of these proposals may harm owners and tenants. specifically some are worried about your proposals to owners to -- jeopardize maintenance and rehabilitation projects and i'm also really concerned that raising minimum rents and increasing medical deductions on tenants could put a real burden on some of these tenants in these tough economic times. can you please talk a little bit about the impact you might have there? >> i would be happy to end a and again much they recognize at the outset, these are not decisions we would make in anything but very difficult fiscal times, making very difficult choices. along with the project-based rental assistance decision, the short funding we talked about earlier, this minimum rents increase was i think the single

most difficult decision in the budget. and i think what is critical is that we need to clarify and make sure that the strong exception policy for everyone where the hardship of increased rent would result, we are not expecting to do that. we are already working on clarifying and strengthening that policy. but there is no question that the impact of this will have some real consequences for families that are struggling. we have analyzed fully in which programs, what are senator families would the affected by this, the average rent increases that would come out of this, the impact of the minimum rent across all the programs. we would be happy to share with

you the specific impact it has for the various project, all the various programs, what impacts those would create. >> it okay, i would really appreciate that. finally talking about homelessness funding, want to acknowledge her leadership and really developing homelessness plans and fostering coordination across departments. it's so important i think we are making progress there. did want to ask you about the homelessness prevention program which was funded in the recovering act and assigned to help families, but the funding for that program ends this year. the emergency tuitions grant program allows continuous efforts but on a much smaller scale. can you talk a little bit about what the outcome has been for hera? >> i'm so glad you asked about it and let me say first of all you asked about the program. we have your league -- without your leadership we would have

never made the progress we made. in one year to have 12% less homeless veterans and 18% fewer sleeping on the streets, that is a huge accomplishment interpersonal leadership around hud has made a huge difference. >> the coordination on that has been really -- see a huge difference. we are concerned about hera. we thought it would originally reach 500,000 people. it has already reached more than 1.2 million still counting and one of the bad things about it, 75% of the folks in its reach our homeless families who have often been the hardest to reach. why have we been able to reach more families? what we have realized through this, what the data has shown us is that for far less money than we expected, we have been able to stabilize or rapidly rehouse families. it might be one months rent or

it might be a security deposit. it might just be a couple months of utility bills but that has allowed us to serve far more people and really i think the most exciting thing about it is it started to reorients many local responses to homelessness where for the first time rapid housing in particular is a very beneficial thing that can be very effective with a small amount of money. our hope is by continuing to invest through the emergency solutions grandin i think it's one of the reasons we propose the train to 30 million-dollar increase this year for her homeless assistant grant account is that we have to continue to invest the. we have to grow the investment there. it's never going to be as much as we had in hera. the hope is and we have started to see this in some areas and washington has been a leader in this, shifting resource is taking them out of for example

shelters, shifting them from medicaid funding that is going to emergency rooms and putting them into rapid rate housing is lowering costs over also what we are hoping to see is with our continued to increase investment in the es g. along with local vestments to complement it that we will continue to see a focus. we are pushing on it and i know you have been supporting it but it's something i saw locally in new york. are re-of rapid rate housing efforts. it was something we were willing to shifter on funding into and that's something we want to encourage at the local level. >> i will be following that very closely. thank you so much for your accommodation today and we are going to leave the record, the hearing record the one who would like to ask additional questions but again appreciate the tremendous work of you and your entire staff on an issue that has been at the forefront of our nation although sometimes nobody really pays attention to the programs and they really are essential on getting us back in

track. you have done a great job and we appreciated. >> thank you or your leadership. >> this hearing is adjourned until thursday march 8 at 10:00 in which we will hear from federal clients in from the housing administration. [inaudible conversations] [inaudible conversations]

>> keep in a person who is a senator, and even a person who is president of the united states faces a predicament when you talk about all sorts are predicaments. they face the fact that they're in a personable number of americans who are racially prejudiced. they face the fact that a much larger portion of the american populace wants to deny the realities of race even now.

rick santorum delivered a full defense of religion in public life on sunday appealing to the social conservatives who revise his presidential campaign. on the talk shows this weekend and in speeches mr. santorum responded to comments made by president john f. kennedy. >> i believe in an america where the separation of church and state is absolute, where no catholic can tell the president how to act and no protestant minister would tell his parishioners for whom to vote. where no church or church school is granted any public funds or political preference and where no man is denied public office merely because of his religion differs from the president who might appoint him or the people who might elect him. >> you can watch more president kennedy speech at our web site on their video library. go to c-span.org and you can

find that in our archives there. >> the white house has requested $51.6 billion for the state department's annual budget. a 1.6% increase over this year spending. secretary of state hillary clinton talks about the state department budget at a hearing of the house foreign relations committee. her testimony came hours after an agreement with north korea to suspend its nuclear activities in exchange for food aid. this is two and a half hours. >> the meeting will come to order. >> because of secretary must leave at 4:00 after opening remarks, and i will ask the secretary to summarize her testimony and then we will move directly to the questions from our members. given the vote situation a ranking member will be recognized to deliver his opening remarks if we aren't going to be interrupted by votes

but here you are and it is no problem. so i want to give my remarks and then you are since you are going to be -- know i will get mine. i don't trust you with my remarks but without objections members they have five days to submit statements and questions for the record. madam secretary, welcome back to the committee to discuss the of administrations foreign relations budget request. all of us have great respect for you madam secretary as well as for your dedicated men and women who promote the interests and values of our nation throughout the world. our nation faces unsustainable deficits so we must justify every dollar that we spend, especially because 35 cents of every dollar is borrowed. i appreciate your restraint with the topline number in your budget proposal coming in at $5.1 billion below last year's request. but i disagree with the priorities and programs funded

with those limited resources. in iraq and afghanistan that governments must be pushed to take the necessary steps to be our long-term reliable partner. we are not seeing such a commitment from karzai or maliki. too much american blood and treasure have been invested in both countries for us to have government threaten american interests. iran's belligerent and unhelpful role in afghanistan and iraq is worrisome particularly with reports indicating they. option of those governments at senior levels. so madam secretary what additional pressure can we bring to bear to offset the iranian influence in afghanistan and iraq? in pakistan the level of cooperation as we know that we get from the government continues to fall short. serious questions persist about whether elements of the pakistani government support prominent in searching groups fighting against our troops in

afghanistan. and other middle eastern countries i have had concerns from day one about the frustrations approach to the arab spring and to the forces at work there including radical islamic groups. the administration appears focused on spending a lot of money in search of a policy. your budget request doubles down on that approach by requesting a 770 million-dollar penalty in north africa, a fund with almost no restrictions on how it can be used. even though press reports indicate that egypt may have decided to lift the travel ban on our ngo workers, we should not reward egypt with aid when it is demonstrating hostility to western democratic entities and engaging in an ongoing dance between authoritarians and the muslim brotherhood. in contrast the administration did the right thing by enforcing u.s. law and cutting off funding to unesco after it undermines

peace by admitting the state of palestine. your request now change the law and send $80 million to unesco with va grave mistake. any weakening of u.s. law would undermine our credibility and get give the green light for other u.n. agencies to grant recognition of a palestinian state. u.s. funding for unesco must only be restored if unesco votes to on admit palestine. the budget for the western hemisphere which is not incheon in the prepared testimony is another example of misplaced ironies. the administration has requested a decrease in funding for the general budget of the organization of american states yet it cuts u.s. contributions to the oas fund for democracy by over $2 million. the administration is proposing increased financial assistance to nicaragua, bolivia and ecuador. three governments that continue to undermine u.s. interests in

the hemisphere, disregards human rights and ignores the rule of law. there can be no justification for such an increase in funds to these countries. in nicaragua they have spent millions to promote free fair and transparent elections. that money was not utilized as elections in nicaragua were fraudulent and ran afoul of the nicaraguan constitution. we must not receive last his performance and ecuador bolivia were state department have more money on environmental programs then counternarcotics operations or good governance. this budget fails to hold the users of democracy in the region accountable and cut support for democracy. instead of standing in solidarity with the cuban and venezuelan people in their time of need this budget turns its back on them. pressure continues unabated in cuba. the castro regime orders the state security forces to -- as

they leave church services on sunday. prisoners of conscience die while many worldwide turn a blind eye to their play. is venezuela the chavez regime has demolished the authority of the national assembly and intimidate the opposition by leveraging control over the judicial system. turning to the disaster system -- in syria this administration does not appear to have a coherent strategy. the russians and the iranians clearly have a strategy and it could be summarized as actively support the repression by the syrian army. the iranian regime defies responsible nations and pursues nuclear weapons capabilities are going nuclear-armed iran is unacceptable and we must oppose any policy that relies on mere containment as a response to the the threat. president president obama said that the united states has an ironclad commitment to the security of israel, so will the

u.s. militarily back israel if it decides to protect itself from an iranian nuclear threat? finally madam secretary i have grave concerns about today's north korea announcement which sounds a lot like this failed agreement of the past. while it's good and it mentions the iranian enrichment program whose existence has so long tonight we must recall that regime constant complicity. one troubling new aspect is the discussion of nuclear issues and food aid in the same announcement which blurs the separation of humanitarian aid from the nuclear negotiations which has been maintained since 1995. the north koreans will view this food as payment for their return to the bargaining table regardless of the transparency and monitoring we hope to secure in the future. again madam secretary thank you so much for making yourself available today and i look

forward and the members do as well to hearing your testimony and now i'm pleased to recognize my friend, the gentleman from california, the ranking member mr. berman for his opening statement. >> thank you very much madam chairman and madam secretary welcome. thanks for being here. at the outset some differences in our view. i would like to commend you for your hard work on north korea. today's announcement of pyongyang has agreed to freeze long-range missile launches nuclear test in uranian enrichment and allow the iaea back into the country appears to be an important step in a long and difficult path. you know, the chair knows and i know and we all know that we have been down this road before and it does remain to be seen whether the north can keep its promises in time. but in the more general sense i would like to recognize the tremendous commitment and dedication you have shown to reestablishing the united

states, not just as an indispensable power but is an indispensable partner. you have made it your vision to show the world the best of who we are as americans. eloquently and consistently you have spoken up for women, for the poor and those whose human rights and dignity's have been trampled. e. of elevated developments alongside diplomacy and defense as the pillar of our national security. within the of and within the halls of congress who have fought to ensure that our diplomats and aid workers receive the resources they need and the respect they deserve. they risked their lives everyday to support support american interests abroad and the face of mounting deficits at home it is important to remember that these are much more cost-effective than deploying our military. today we are here to assess how the president's fiscal 2013 budget response to the threats and parties we face as a nation. many people believe erroneously that foreign aid accounts for 20% or more of our budget.

the truth is we spend just over 1% of our national budget on diplomacy and development get these programs have an outside impact on our health, prosperity and security here at home. with one in five american jobs dependent on trade half are experts going to developing countries are overseas programs are critical part of strengthening the american economy and getting america back to work or go to our security is threatened if nuclear weapons fall into the wrong hands or fragile and failing states become training down -- training ground for terrorists. nearly a quarter of 2013 fiscal year international affairs budget request is dedicated to supporting critical u.s. efforts in the front-line states of iraq and afghanistan and pakistan and finally the principles we cherish are under mind if we allow families to go hungry, children to die but veasley or

bendable diseases and girls to be kept out of school. in short helping countries to become more democratic, more stable, more capable of defending themselves and better pulling themselves out of poverty is just as important for us and our national security as it is for them. to succeed we must ensure that our budget resources are allocated wisely, and international programs are carried out in the most efficient and effective manner. before closing i would like to highlight two of my interrelated priorities. the middle east peace and the effort to prevent iran from developing a nuclear weapon capability. madam secretary for the past three years the palestinians have simply refuse to refused to engage seriously in peace talks. my conclusion is palestinian leaders don't have the will or the desire to make the compromises necessary to achieve peace. they don't want to engage seriously because they know when

and they won't be able to do the deal. that is what happened at camp david in 2000 cobalt in 2001 and now barely two decades after oslo i see no evidence that the palestinians have begun to prepare their public for the prospect that they will have to relinquish the so-called right of return and recognize israel as a jewish state, two critical elements. i find that disturbing. meanwhile the israelis continue to say they will negotiate anytime, anyplace. the palestinian leaders really want statehood and they will have to show it both to their public commitments and bank aging in serious negotiations with israel. if they try to circumvent negotiations by once again taking their case to the united nations they will get no recognition from the united states and they won't get the time of the day from the u.s. congress. the only solution to the

israeli-palestinian conflict that can bring peace and security to both parties is a two-state solution and that only can become a reality third direct negotiations. let me turn to another issue, what i consider the greatest security challenge facing israel and the united states, namely the threat of a nuclear-armed iran. i believe during your first testimony before this committee in 2009 that he first said that are role was to impose crippling sanctions on iran if the regime doesn't suspend its uranium enrichment program and otherwise comply with the demands of the u.n. security council. now the sanctions are finally starting to happen and within a few weeks or so the congress invites you to pass new legislation. legislation that tightens sanctions and give seed administration new authority to tighten sanctions further. the houses passed its version of that legislation and the iran

threat reduction act by an overwhelming vote like last year. can you give us a status report on the impact of citizens and iran in on whether there any signs they are starting to have the desired effect on the thinking of the iranian decision may cures? thank you adam secretary and i look forward to hearing your testimony. >> i think of the ranking member and now it is an honor to welcome the secretary to our committee today, the honorable hillary rodham clinton has served as the 67th secretary of state for the united states since january 21, 2009. the latest chapter in her four decade career public service. she has served previously as united states senator from the state of new york, as first lady of the united states and of the state of arkansas as an attorney and a law professor. madam secretary without objection your forward and state and will be made part of the record and if you'd be so kind as to summarize your written remarks we can move likely to

the question-and-answer discussion on that the five-minute rule and the hopes of getting to all of our members before you have to depart. madam secretary welcome again in the and the floors are his. >> thank you very much madam chairman and ranking member. it's very good to be back here and i'm grateful to your committee and members for the support and consultation that we have enjoyed over this past three years. i look forward to your questions submit my entire statement for the record and look forward to having a chance to exchange views with you today. thank you. >> thank you so we can get right to the question-and-answer madam secretary? thank you so much. the chair recognizes herself for her questions. madam secretary i've heard from a number of my constituents and as you know i represent south florida, the gateway to the americas, who are worried that a country led by chavez are continuing to pressure to invite

cuba to the summit of the americas in april even though the castro dictatorship does not meet the criteria to join the meeting as you know. will you pledge your today that if cuba is invited that president obama and you madam secretary will refuse to attend the summit meeting and secondly and i will ask at all it wants you can adam adam secretary. on iran and the western hemisphere just last month ahmadinejad -- his trip to venezuela nicaragua cuba and ecuador reaffirmed iran's commitment to undermine u.s. national security interests. i'm concerned about iran's willingness to attack the united states homeland or our critical allies such as israel. with the rising threat posed by the quds force and the iranian iranian -- such as hezbollah in our region will we dedicate more attention to these illicit activities in the annual

terrorism report and lastly, what is the administration doing to ensure cooperation from our allies in the hemisphere with respect to iran and to hold accountable those countries that are supporting and enabling iran's threatening activities? thank you madam secretary. >> thank you very much. with respect to the question about the summit of america we did not believe there is any intention to invite cuba. we have made our views on that well-known. they don't fit the definition of the democratic country and the development of democracy in the hemisphere so at this point it would be absolutely no basis and no intention to invite them to the summit. regarding iran and the western hemisphere, you know obviously iran, facing these very effective sanctions and there is a aggressive enforcement is becoming increasingly desperate,

looking for a friend wherever they think they can find them. and they are not getting the kind of response. on the tour of pirates that you referenced our analysis of what happened is that fell very far short of what the iranians had hoped for. that said, we are concerned about the activities of iran and hezbollah in the western hemisphere. we continue to monitor the situation closely. we will take appropriate action to counter any threat that may arise. we are a aware of and concerned about allegations that some latin american drug trafficking organizations are linked with hezbollah and iran. we have not found information to verify a lot of the allegations but of course the recent incident concerning the attempted assassination of the saudi ambassador is a very large question mark and wake-up call. we are continuing to look for

direct links and we are engaged very extensively with our partners in the hemisphere both to educate them about the dangers posed by iran and hezbollah and also to work with them to heighten our intelligence sharing. now we did impose sanctions in 2008 and extended them last year on the venezuelan military industry company for violating a ban on technology that could help iran in making women so we are committed to taking action. but what we have said much to our encouragement, is that our partners in latin america are really understanding the threats. recently at the iaea brazil mexico and chile joined us in voting for a resolution calling on a ran to address concerns about the nuclear program. last year chilean mexico and brazil voted to create the u.n. human rights council special

offer to her on iran and our close correlation with mexican authorities actually was instrumental in breaking up the assassination plot against the saudi ambassador. i think madam chairman we are alert to this. we are watching it closely. we are building a very strong international and hemispheric coalition again with any efforts of hezbollah against our area. >> thank you mr. secretary and i get back to madam my time to mr. berman. >> thank you adam secretary. the obama administration is the first administration to use -- sanctions and a robust way and you deserve praise for that. i know the president you and numerous officials have put in literally thousands of hours trying to persuade foreign officials and foreign businessmen to respect our sanctions and to help isolate iran all for the purpose of

implementing a policy intended to lead iran to abandon its nuclear weapons program. in that regard i think it would be helpful to put to rest concerns of some observers that the administration is resigned to iran becoming a nuclear threshold stay. i think it's important to reassure us on that point based on my understanding of the administration's policy. i think you should be able to do that. three months ago on december 1 secretary of state burns and israeli deputy foreign minister ioloni it should joint statement that spoke of in a quote preventing iran from developing a nuclear weapons capability end of quote in a pentagon publication last month the u.s. seeks to quote prevent iran's development of nuclear weapons capability"